bitcoin-cli (and other software) communicates with Bitcoin Core using the so-called JSON-RPC protocol.
If you start Bitcoin Core as bitcoind (without GUI), that protocol is enabled by default (because otherwise there'd be no way to interact with it). If you start Bitcoin Core as bitcoin-qt (with GUI), that protocol is disabled by default (because the assumption is that the user will be using the GUI to interact with it). If you want to use both the GUI and the JSON-RPC protocol, you need to start bitcoin-qt with the -server argument.
In recent versions (since 2015 or so), you don't need to configure a username/password - bitcoin-cli can use "cookie authentication" instead to get access. Configuring a username/password is mostly useful if you want to have other external software talk to Bitcoin Core that doesn't support cookie authentication, or if you want to talk to Bitcoin Core over the network (cookie authentication only works on the local machine itself, from the same user).
If you do set a username/password, and pick an insecure one, there may be a risk. An attacker that gets access to the RPC interface can do anything - including stealing your money.
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